snbr-20240629

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-25121

_______________________________________________________________________

SLEEP NUMBER CORPORATION

(Exact name of registrant as specified in its charter)


Minnesota		41-1597886
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


1001 Third Avenue South
Minneapolis,	Minnesota	55404
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (763) 551-7000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SNBR	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the

registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller

reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller

reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 29, 2024, 22,355,000 shares of the registrant’s Common Stock were outstanding.

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited - in thousands, except per share amounts)


	June 29, 2024	December 30, 2023
Assets
Current assets:
Cash and cash equivalents	$2,020	$2,539
Accounts receivable, net of allowances of $1,098 and $1,437, respectively	20,272	26,859
Inventories	95,845	115,433
Prepaid expenses	21,322	16,660
Other current assets	37,925	44,637
Total current assets	177,384	206,128

Non-current assets:
Property and equipment, net	153,676	179,503
Operating lease right-of-use assets	373,518	395,411
Goodwill and intangible assets, net	66,523	66,634
Deferred income taxes	25,397	20,253
Other non-current assets	87,147	82,951
Total assets	$883,645	$950,880

Liabilities and Shareholders’ Deficit
Current liabilities:
Borrowings under revolving credit facility	$540,200	$539,500
Accounts payable	106,039	135,901
Customer prepayments	44,518	49,143
Accrued sales returns	20,531	22,402
Compensation and benefits	35,305	28,273
Taxes and withholding	16,563	17,134
Operating lease liabilities	80,914	81,760
Other current liabilities	56,500	61,958
Total current liabilities	900,570	936,071

Non-current liabilities:
Operating lease liabilities	327,810	351,394
Other non-current liabilities	102,229	105,343
Total liabilities	1,330,609	1,392,808

Shareholders’ deficit:
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding	—	—
Common stock, $0.01 par value; 142,500 shares authorized, 22,355 and 22,235 shares issued and outstanding, respectively	224	222
Additional paid-in capital	24,211	16,716
Accumulated deficit	(471,399)	(458,866)
Total shareholders’ deficit	(446,964)	(441,928)
Total liabilities and shareholders’ deficit	$883,645	$950,880

See accompanying notes to condensed consolidated financial statements.

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1 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited - in thousands, except per share amounts)


	Three Months Ended		Six Months Ended
	June 29, 2024	July 1, 2023	June 29, 2024	July 1, 2023
Net sales	$408,413	$458,789	$878,862	$985,316
Cost of sales	166,923	194,544	361,198	410,806
Gross profit	241,490	264,245	517,664	574,510

Operating expenses:
Sales and marketing	182,400	197,779	390,912	428,267
General and administrative	39,573	39,795	78,652	79,196
Research and development	11,578	15,445	24,019	29,888
Restructuring costs	1,819	—	12,419	—
Total operating expenses	235,370	253,019	506,002	537,351
Operating income	6,120	11,226	11,662	37,159
Interest expense, net	12,270	9,948	24,569	19,050
(Loss) income before income taxes	(6,150)	1,278	(12,907)	18,109
Income tax (benefit) expense	(1,099)	524	(374)	5,890
Net (loss) income	$(5,051)	$754	$(12,533)	$12,219

Basic net (loss) income per share:
Net (loss) income per share – basic	$(0.22)	$0.03	$(0.56)	$0.55
Weighted-average shares – basic	22,614	22,460	22,560	22,378

Diluted net (loss) income per share:
Net (loss) income per share – diluted	$(0.22)	$0.03	$(0.56)	$0.54
Weighted-average shares – diluted	22,614	22,502	22,560	22,543

See accompanying notes to condensed consolidated financial statements.

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2 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Deficit

(unaudited - in thousands)


	Common Stock		Additional Paid-in Capital	Accumulated Deficit	Total
	Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at December 30, 2023	22,235	$222	$16,716	$(458,866)	$(441,928)
Net loss	—	—	—	(7,482)	(7,482)
Stock-based compensation	134	1	4,116	—	4,117
Repurchases of common stock	(43)	—	(570)	—	(570)
Balance at March 30, 2024	22,326	$223	$20,262	$(466,348)	$(445,863)
Net loss	—	—	—	(5,051)	(5,051)
Stock-based compensation	32	1	3,991	—	3,992
Repurchases of common stock	(3)	—	(42)	—	(42)
Balance at June 29, 2024	22,355	$224	$24,211	$(471,399)	$(446,964)


	Common Stock		Additional Paid-in Capital	Accumulated Deficit	Total
	Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at December 31, 2022	22,014	$220	$5,182	$(443,579)	$(438,177)
Net income	—	—	—	11,465	11,465
Exercise of common stock options	17	—	389	—	389
Stock-based compensation	271	3	4,636	—	4,639
Repurchases of common stock	(118)	(1)	(3,362)	—	(3,363)
Balance at April 1, 2023	22,184	$222	$6,845	$(432,114)	$(425,047)
Net income	—	—	—	754	754
Exercise of common stock options	3	—	39	—	39
Stock-based compensation	33	—	5,251	—	5,251
Repurchases of common stock	(6)	—	(138)	—	(138)
Balance at July 1, 2023	22,214	$222	$11,997	$(431,360)	$(419,141)

See accompanying notes to condensed consolidated financial statements.

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3 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)


	Six Months Ended
	June 29, 2024	July 1, 2023
Cash flows from operating activities:
Net (loss) income	$(12,533)	$12,219
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	34,177	36,749
Stock-based compensation	8,109	9,890
Net loss on disposals and impairments of assets	2,500	181
Deferred income taxes	(5,144)	(8,272)
Changes in operating assets and liabilities:
Accounts receivable	6,587	1,903
Inventories	19,588	(7,412)
Income taxes	774	1,808
Prepaid expenses and other assets	(1,483)	(5,824)
Accounts payable	(18,464)	(10,244)
Customer prepayments	(4,625)	(14,683)
Accrued compensation and benefits	7,153	7,594
Other taxes and withholding	(1,345)	(2,074)
Other accruals and liabilities	(11,776)	(3,115)
Net cash provided by operating activities	23,518	18,720

Cash flows from investing activities:
Purchases of property and equipment	(14,075)	(29,899)
Issuance of note receivable	(2,942)	(435)
Net cash used in investing activities	(17,017)	(30,334)

Cash flows from financing activities:
Net (decrease) increase in short-term borrowings	(6,408)	14,693
Repurchases of common stock	(612)	(3,501)
Proceeds from issuance of common stock	—	428
Net cash (used in) provided by financing activities	(7,020)	11,620

Net (decrease) increase in cash and cash equivalents	(519)	6
Cash and cash equivalents, at beginning of period	2,539	1,792
Cash and cash equivalents, at end of period	$2,020	$1,798

See accompanying notes to condensed consolidated financial statements.

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4 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

1. Business and Summary of Significant Accounting Policies

Business & Basis of Presentation

The Company prepared the condensed consolidated financial statements as of and for the three and six months ended

June 29, 2024 of Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company), without

audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in the

opinion of management, all normal recurring adjustments, including the elimination of all significant intra-entity balances

and transactions, necessary to present fairly its financial position as of June 29, 2024 and December 30, 2023, and the

consolidated results of operations and cash flows for the periods presented. The historical and quarterly consolidated

results of operations may not be indicative of the results that may be achieved for the full year or any future period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and

regulations. These condensed consolidated financial statements should be read in conjunction with the most recent

audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for

the fiscal year ended December 30, 2023 and other recent filings with the SEC.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to

make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities,

disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the

reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently

an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined

with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected

in the consolidated financial statements in future periods and could be material. The Company’s critical accounting

policies consist of stock-based compensation, warranty liabilities and revenue recognition.

2. Fair Value Measurements

At both June 29, 2024 and December 30, 2023, the Company had $19 million of debt and equity securities that fund the

deferred compensation plan and are classified in other non-current assets. The Company also had corresponding

deferred compensation plan liabilities of $19 million at both June 29, 2024 and December 30, 2023, which are included

in other non-current liabilities. The majority of the debt and equity securities are Level 1 as they trade with sufficient

frequency and volume to enable the Company to obtain pricing information on an ongoing basis. Unrealized gains/

(losses) on the debt and equity securities offset those associated with the corresponding deferred compensation plan

liabilities.

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SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)


5 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

3. Inventories

Inventories consisted of the following (in thousands):


	June 29, 2024	December 30, 2023
Raw materials	$7,899	$9,092
Work in progress	94	92
Finished goods	87,852	106,249
	$95,845	$115,433

4. Goodwill and Intangible Assets, Net

Goodwill and Indefinite-lived Intangible Assets

Goodwill was $64 million at June 29, 2024 and December 30, 2023. Indefinite-lived trade name/trademarks totaled $1.4

million at both June 29, 2024 and December 30, 2023.

Definite-lived Intangible Assets

Patents were $2.0 million at both June 29, 2024 and December 30, 2023. Accumulated amortization was $0.9 million at

June 29, 2024 and $0.8 million at December 30, 2023. Amortization expense for both the three months ended June 29,

2024 and July 1, 2023, was $55 thousand, and for both the six months ended June 29, 2024 and July 1, 2023 was

$0.1 million.

Annual amortization for Patents for subsequent years are as follows (in thousands):


2024 (excluding the six months ended June 29, 2024)		$111
2025		226
2026		222
2027		222
2028		155
2029		99
Thereafter		46
Total future amortization for definite-lived intangible assets		$1,081

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SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)


6 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

5. Credit Agreement

As of June 29, 2024, the Company’s credit facility had a total commitment amount of $680 million. The credit facility is

for general corporate purposes, to meet seasonal working capital requirements and to repurchase its stock. The Credit

Agreement includes an accordion feature which allows the Company to increase the amount of the credit facility from

$680 million to $1.0 billion, subject to lenders’ approval. The Credit Agreement provides the lenders with a collateral

security interest in substantially all of the Company’s assets and those of its subsidiaries and requires the Company to

comply with, among other things, a maximum net leverage ratio and a minimum interest coverage ratio.

The maximum net leverage ratio permitted by the Credit Agreement is 5.50 to 1.00 for the quarterly period ended

June 29, 2024; 5.00 to 1.00 for the quarterly reporting period ending September 28, 2024; 4.80 to 1.00 for the quarterly

reporting period ending December 28, 2024; and 4.00 to 1.00 for each quarterly reporting period occurring thereafter.

The minimum interest coverage ratio permitted by the Credit Agreement is 1.25 to 1.00 for the quarterly period ended

June 29, 2024; 1.50 to 1.00 for the quarterly reporting periods ending September 28, 2024 and December 28, 2024; and

3.00 to 1.00 for each quarterly reporting period occurring thereafter.

The carrying amount of the outstanding borrowings under the Credit Agreement approximates fair value because

interest rates approximate the current rates available to the Company. Under the terms of the Credit Agreement, the

Company pays a variable rate of interest and a commitment fee based on its leverage ratio. The Credit Agreement

matures in December 2026. The Company was in compliance with all financial covenants as of June 29, 2024.

The following table summarizes the Company’s borrowings under the credit facility ($ in thousands):


	June 29, 2024	December 30, 2023
Outstanding borrowings	$540,200	$539,500
Outstanding letters of credit	$7,147	$7,147
Additional borrowing capacity	$132,653	$138,353
Weighted-average interest rate	8.4%	8.5%

6. Leases

The Company leases its retail, office and manufacturing space under operating leases which, in addition to the minimum

lease payments, may require payment of a proportionate share of the real estate taxes and certain building operating

expenses. While the Company’s local market development approach generally results in long-term participation in given

markets, the retail store leases generally provide for an initial lease term of five to 10 years. The Company’s office and

manufacturing leases provide for an initial lease term of up to 15 years. In addition, the Company’s mall-based retail

store leases may require payment of variable rent based on net sales in excess of certain thresholds. Certain leases may

contain options to extend the term of the original lease. The exercise of lease renewal options is at the Company’s sole

discretion. Lease options are included in the lease term only if exercise is reasonably certain at lease commencement.

The Company’s lease agreements do not contain any material residual value guarantees. The Company also leases

vehicles and certain equipment under operating leases with an initial lease term of three to six years.

The Company’s operating lease costs include facility, vehicle and equipment lease costs, but exclude variable lease

costs. Operating lease costs are recognized on a straight-line basis over the lease term, after consideration of rent

escalations and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease

commencement date or the date the Company takes possession of the property. During lease renewal negotiations that

extend beyond the original lease term, the Company estimates straight-line rent expense based on current market

conditions. Variable lease costs are recorded when it is probable the cost has been incurred and the amount can be

reasonably estimated.

At June 29, 2024, the Company’s finance right-of-use assets and lease liabilities were not significant.

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SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)


7 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

Lease costs were as follows (in thousands):


	Three Months Ended		Six Months Ended
	June 29, 2024	July 1, 2023	June 29, 2024	July 1, 2023
Operating lease costs(1)	$26,909	$28,083	$53,735	$56,372
Variable lease costs(2)	$8	$129	$(41)	$182

___________________________

(1)Includes short-term lease costs which are not significant.

(2)Variable lease costs include adjustments to percentage rent.

The maturities of operating lease liabilities as of June 29, 2024, were as follows(1) (in thousands):


2024 (excluding the six months ended June 29, 2024)	$53,107
2025	100,672
2026	88,780
2027	72,728
2028	60,841
2029	41,075
Thereafter	71,244
Total operating lease payments(2)	488,447
Less: Interest	79,723
Present value of operating lease liabilities	$408,724

___________________________

(1)Future payments for real estate taxes and certain building operating expenses for which the Company is obligated are not included in the operating

lease liabilities. Total operating lease payments exclude $19 million of legally binding minimum lease payments for leases signed but not yet

commenced.

(2)Includes the current portion of $81 million for operating lease liabilities.

Other information related to operating leases was as follows:


	June 29, 2024	December 30, 2023
Weighted-average remaining lease term (in years)	5.7	5.9
Weighted-average discount rate	6.6%	6.5%


	Six Months Ended
(in thousands)	June 29, 2024	July 1, 2023
Cash paid for amounts included in present value of operating lease liabilities	$54,300	$53,476
Right-of-use assets obtained in exchange for operating lease liabilities	$16,313	$32,831

7. Repurchases of Common Stock

For the three months ended June 29, 2024 and July 1, 2023, we repurchased $42 thousand and $138 thousand,

respectively, of common stock in connection with the vesting of restricted stock grants. For the six months ended

June 29, 2024 and July 1, 2023, we repurchased $0.6 million and $3.5 million, respectively, of common stock in

connection with the vesting of restricted stock grants. We made no purchases under the Board-approved stock purchase

plan in either period. As of June 29, 2024, the remaining authorization under the Board-approved $600 million share

repurchase program was $348 million.

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SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)


8 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

8. Revenue Recognition

Deferred contract assets and deferred contract liabilities are included in the condensed consolidated balance sheets as

follows (in thousands):


	June 29, 2024	December 30, 2023
Deferred contract assets included in:
Other current assets	$29,771	$28,567
Other non-current assets	52,312	54,795
	$82,083	$83,362


	June 29, 2024	December 30, 2023
Deferred contract liabilities included in:
Other current liabilities	$37,720	$36,421
Other non-current liabilities	65,362	69,098
	$103,082	$105,519

Deferred revenue and costs related to SleepIQ® technology are currently recognized on a straight-line basis over the

product's estimated life of 4.5 to 5.0 years because the Company’s inputs are generally expended evenly throughout the

performance period. During both the three months ended June 29, 2024 and July 1, 2023, the Company recognized

revenue of $10 million, that was included in the deferred contract liability balances at the beginning of the respective

periods. During both the six months ended June 29, 2024 and July 1, 2023, the Company recognized revenue of $19

million, that was included in the deferred contract liability balances at the beginning of the respective periods.

Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of

revenues for both the three and six months ended June 29, 2024 and July 1, 2023.

Net sales were as follows (in thousands):


	Three Months Ended		Six Months Ended
	June 29, 2024	July 1, 2023	June 29, 2024	July 1, 2023
Retail stores	$358,584	$402,145	$773,339	$860,808
Online, phone, chat and other	49,829	56,644	105,523	124,508
Total Company	$408,413	$458,789	$878,862	$985,316

Obligation for Sales Returns

The activity in the sales returns liability account was as follows (in thousands):


	Six Months Ended
	June 29, 2024	July 1, 2023
Balance at beginning of year	$22,402	$25,594
Additions that reduce net sales	46,664	57,849
Deductions from reserves	(48,535)	(57,967)
Balance at end of period	$20,531	$25,476

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SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)


9 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

9. Stock-based Compensation Expense

Total stock-based compensation expense was as follows (in thousands):


	Three Months Ended		Six Months Ended
	June 29, 2024	July 1, 2023	June 29, 2024	July 1, 2023
Stock awards (1)	$3,294	$4,258	6,438	$8,113
Stock options	698	994	1,671	1,777
Total stock-based compensation expense (1)	3,992	5,252	8,109	9,890
Income tax benefit	809	1,417	1,719	2,670
Total stock-based compensation expense, net of tax	$3,183	$3,835	$6,390	$7,220

___________________________

(1) Changes in stock-based compensation expense include the cumulative impact of the change in the expected achievements of certain performance

targets.

10. Profit Sharing and 401(k) Plan

Under the Company’s profit sharing and 401(k) plan, eligible employees may defer up to 50% of their compensation on a

pre-tax basis, subject to Internal Revenue Service limitations. Each pay period, the Company makes a contribution equal

to a percentage of the employee’s contribution. During the three months ended June 29, 2024 and July 1, 2023, the

Company’s contributions, net of forfeitures, were $1.2 million and $2.8 million, respectively and during the six months

ended June 29, 2024 and July 1, 2023, were $3.2 million and $5.2 million, respectively.

11. Net Income per Common Share

The components of basic and diluted net (loss) income per share were as follows (in thousands, except per share

amounts):


	Three Months Ended		Six Months Ended
	June 29, 2024	July 1, 2023	June 29, 2024	July 1, 2023
Net (loss) income	$(5,051)	$754	$(12,533)	$12,219
Reconciliation of weighted-average shares outstanding:
Basic weighted-average shares outstanding	22,614	22,460	22,560	22,378
Dilutive effect of stock-based awards	—	42	—	165
Diluted weighted-average shares outstanding	22,614	22,502	22,560	22,543
Net (loss) income per share – basic	$(0.22)	$0.03	$(0.56)	$0.55
Net (loss) income per share – diluted	$(0.22)	$0.03	$(0.56)	$0.54

For the three and six months ended June 29, 2024, otherwise dilutive stock-based awards have been excluded from the

calculation of diluted weighted-average shares outstanding, as their inclusion would have had an anti-dilutive effect on

our net loss per diluted share. Additional potential dilutive stock-based awards totaling 1.3 million for both the three

months ended June 29, 2024 and July 1, 2023, and 1.3 million and 1.2 million for the six months ended June 29, 2024

and July 1, 2023, respectively, have been excluded from the diluted net (loss)/income per share calculations because

these stock-based awards were anti-dilutive.

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SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)


10 \| 2Q 2024 FORM 10-Q		SLEEP NUMBER CORPORATION

12. Restructuring Costs

In the fourth quarter of 2023, the Company initiated cost reduction actions to reduce operating expenses and accelerate

gross margin initiatives, and recognized $15.7 million of restructuring costs in that quarter. In addition to the costs

incurred in 2023, the Company incurred an additional $1.8 million and $12.4 million of restructuring costs during the

three and six months ended June 29, 2024, respectively. Charges incurred related to this initiative were comprised of

contract termination costs, severance and employee-related benefits, professional fees and other, and asset impairment

charges and are included in the restructuring costs line in the Company’s consolidated statement of operations. The

Company expects an additional $1 million to $2 million of restructuring costs to be incurred through the remainder of

2024.

During the three and six months ended June 29, 2024, the Company recognized $1.8 million and $12.4 million of

restructuring costs, respectively, as follows (in thousands):


	Three Months Ended	Six Months Ended
	June 29, 2024	June 29, 2024
Cash restructuring costs:
Contract termination costs (1)	$(230)	$4,183
Severance and employee-related benefits	401	1,242
Professional fees and other


		Page
PART I: FINANCIAL INFORMATION		1

Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Shareholders' Deficit	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II: OTHER INFORMATION		27

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
SIGNATURES		30